Traders at the Nairobi Securities Exchange (NSE) will soon have a new trading system installed according to the statement released by NSE.
The NSE says it is in the process of installing the new trading system that has been purchased from the United Kingdom’s MilleniumIT at a cost of 110 million shillings.
In the past, system failure at the NSE has been blamed for delays in trading as well as leading to losses every time it breaks down.
NSE says it hopes to multiply volumes traded at the new platform as well as attract more retail investments at the time most listed firms are struggling to remain afloat.
The NSE also hopes to tap into the system’s ability to enable mobile-based trading as it allows integration by third-party apps to enable investors to trade via their mobile phones.
The system also comes at a time the NSE revised the target for the newly released M-Akiba Bond from 250 million shillings to 500 million shillings with the target being the youth in Kenya.
The NSE has 1.4 million local investors on its platform but only 100,000 are active, leaving 1.3 million investors “idle”.
For years, the NSE has faced a challenge of changing the perception of millions of Kenyans who feel the trading platform is only for big corporations and elites. The NSE is trying to break through this through the introduction of M-Akiba to target Kenyans across the board but still, there is no enough information to satisfy Kenyans.
Lots of individuals have no idea what stock markets are. To them, it is just something they see in the business section or news that doesn’t make sense, and for this reason, they have no idea how lucrative it can be.
The knowledge of the stock markets isn’t complete without defining the initial public offering (IPO). An IPO, as the name hints, refers to the first time a private company offers its shares/stock to the public.
The issuant of the stocks can be small companies or businesses looking for growth expansion. Large private enterprises can also issue their stocks to be traded publicly.
Through the help of an underwriting firm, a company wishing to offer an IPO establishes the type of security to offer, the best price, the perfect time to bring it to the market, as well as the best number of shares to be traded.
This is where the stock markets come in. A stock market, in layman terms, is a venue where people looking to trade in shares (stocks of a company) come together and decide on a price to trade. Although some exchanges are physical, nowadays stock exchanges are largely done virtually where the trading occurs and the records updated electronically.
In a stock market, shareholders of certain companies and corporations trade their shares with potential customers. It is worth noting that the company listed on the stock market do not trade – buy or sell – their shares regularly. Sometimes, they may buy back the stock or offer new shares, but not daily. This often occurs outside their framework.
What this means is that when you buy shares on the stock market, you are not buying it from the listed company but from another shareholder. The same goes for when you sell the shares. Another investor buys them from you.
Many shy away from stock markets due to unpredictability. Others do not know that in a stock market, the rules are subject to the law of best practices and equality in the business environment.
In Kenya, for instance, the Capital Markets Authority is the Government Regulator. It is mandated to license and monitor the capital markets as well as to approve the public offers and listings of securities traded at the Nairobi Stock Exchange (NSE).
How are the prices for shares set in a stock market? There are several ways, but the predominant one is the auction process where buyers and sellers place bids and offer to buy or sell.
When one wishes to buy a share at a specific price, that is a bid. On the other hand, an offer, also known as to ask, is the price at which somebody wishes to sell. When the two coincide, a transaction is made.
How you make money and how you calculate the profits or losses is through a simple process. What you earn depends on the initial dividend yield on cost, the intrinsic value per share, and the price-to-earnings ratio
You can collect cash dividends or share on the consistent growth of the primary earnings per share, or you can earn more or less for the profit the company generates depending on the economic fluctuations – the panics and the optimism – which usually drives the price-to-earnings ratio.